China’s International Tourism under Economic Transition: National Trends and Regional Disparities By Liang, Chyi-lyi (Kathleen), The University of Vermont, Department of Community Development and Applied Economics, 103 C Morrill Hall, Burlington, Vermont 05405. Phone (802) 656 0754 Fax (802) 656 1423 e-mail: [email protected] Guo, Rong, The University of Vermont, Department of Community Development and Applied Economics, 004 Morrill Hall, Burlington, Vermont 05405. Phone (802) 656 8289 Fax (802) 656 1423 e-mail: [email protected] Wang, Qingbin, The University of Vermont, Department of Community Development and Applied Economics, 205 Morrill Hall, Burlington, Vermont 05405. Phone (802) 656 4564 Fax (802) 656 1423 e-mail: [email protected] Paper prepared for presentation at the American Agricultural Economics Association Annual Meeting, Montreal, Canada, July 27-30, 2003 Keyword: China, tourism, Gini coefficient JEL code: Q000 Copyright 2003 by Liang, Guo, and Wang. All rights reserved. Readers may make verbatim copies of this document for non-commercial purposes by any means, provided that this copyright notice appears on all such copies. Contact person - Liang, Chyi-lyi (Kathleen), The University of Vermont, Department of Community Development and Applied Economics, 103 C Morrill Hall, Burlington, Vermont 05405. Phone (802) 656 0754 Fax (802) 656 1423 e-mail: [email protected] 1 China’s International Tourism under Economic Transition: National Trends and Regional Disparities Abstract China’s Tourism industry, especially international tourism, has expanded rapidly since its market-oriented economic reform started in 1978. There has been limited information regarding the trends and regional disparities. This paper examines the national trends of China’s international tourism since 1982 and analyzes the changes in regional disparities since 1995. While the trend analysis suggests that China’s international tourism is likely to keep growing at a significant rate, the analysis of regional disparities based on Gini coefficient indicates that the regional inequality in the number of international tourists and income has shown a downward trend since 1995. Findings from this study suggest that China’s economic reform has stimulated the growth in international tourism and the international tourism has contributed to its economic growth and business development. Introduction As a result of China’s market-oriented economic reform started in 1978, its tourism industry, especially international tourism, has expanded rapidly since the early 1980s. Significant evidence indicates that China’s tourism has evolved into one of the most promising and fastest-developing industries in the national economy. For example, China’s total number of international tourists increased by 14.75% and foreign earnings from international tourism increased by 18.72% between 1982 and 2000. China’s international tourists reached 83.48 million in 2000, which was 46 times more than the 1.8 million tourists recorded in 1978 (He, 2 2001). Similarly the foreign earnings from the international tourists reached $16.2 billion in 2000 compared to only $263 million in 1978. The information above suggests that Tourism industry has emerged as a significant economic contributor in the Chinese society. As a result of the rapid development of China’s tourism and its contribution to the national economy, several studies have examined the growth and problems of China’s tourism industry. Yu (1992) studied the emerging markets for China’s Tourism industry and indicated that international tourist arrivals showed a rebound in 1990 after the loss in 1989 due to political turmoil. Before 1989, Japan, United States, United Kingdom, and Australia were among the top tourist-generating countries to China. However Taiwan became the largest tourist-generating market for China after the 1989 Tiananmen Square incident, followed by Japan, the United States,and the Soviet Union. The change in the travelers’ patterns created different impacts on economic development as well as international trade. Tisdell and Wen (1991) provided an overview of tourism investment in China in the period of 1979-1988 and examined the role of the foreign investment in the expansion of China’s tourism sector. They also pointed out that the investment tended to be concentrated in the building of hotels and based more on the preconceptions by officials and suppliers rather than on the market studies. Later in another study, Wen and Tisdell (2001) analyzed the trends in regional concentration of international tourism in China from 1986 to 1998. Gini coefficients for major tourist indicators were estimated to examine the characteristics of tourism distribution. Distributional shifts within both inland and coastal areas are discussed separately in order to consider comprehensive forces reinforcing or reducing regional inequalities in China’s Tourism industry. Other studies discussed some observations on China’s international tourists, the development and organization of travel services in China, trade and advertising campaign in China to promote international tourism, and 3 the relationship between international tourism development and delivery system in China (Choy and Can, 1988; Del Rosso, 1990; Gaines, 1990; Gerstlacher, Krieg, and Sternfeld, 1991; Hunt, 1990; Lu, 1990; China Travel and Tourism Press, 1990-2001; Zhang, 1989; Zhou, 1990). Previous empirical studies had been conducted on China’s tourism development, and they either concentrated on the specific region (such as Mt Paekdusan/Changbaishan, a popular international tourist destination located at the border of Korea and China), or simply divided the whole China into two areas: coast and inland (Wen and Tisdell, 2001). Few studies focused on tourism distribution and its impact among different regions in China. One would expect a significant difference between coastal areas and inland areas when dealing with tourists’ distribution as well as their economic contributions. Based on this consideration, this paper aims to investigate the spatial distribution of international tourism in China during the period of 1995- 2000. The goals of this study are to (1) explore China’s international tourism development; (2) examine the changes of the tourists’ spatial distribution; and (3) estimate the economic contribution due to the international tourists using the Gini coefficients for various regions. National Trends of China’s International Tourism Figure 1 and Figure 2 showed that China’s total number of international tourists increased from 7.92 million in 1982 to 83.48 million in 2000, and China’s annual foreign exchange earnings from international tourism increased from 843 million to 16,224 million U.S. dollars over the same period. 4 Figure 2 China’s Foreign Earnings from In from Earnings Foreign China’s 2 Figure Figure 1 China’s Total Number of Internationa of Number Total China’s 1 Figure (USD million) million) (USD Foreign exchange income from tourism 12000.00 16000.00 4000.00 8000.00 Total number of international tourists 10.00 20.00 30.00 40.00 50.00 60.00 70.00 80.00 0.00 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 ternational Tourism from 1982 to 2000 2000 to 1982 from Tourism ternational l Tourists from 1982 to 2000 (million) (million) 2000 to 1982 from Tourists l year 5 year China’s tourism industry was very limited until the late 1970s among the developing countries. Since 1980, China’s Tourism industry had shown a remarkable expansion and growth (Zhu, 2001). Several policies between 1980s and 1990s had made significant contributions to the rapid changes in China’s international Tourism development. The first dramatic change in China’s policies came from the continuous support and guidance by government agencies. As the general designer of China’s reform and opening door policy, Mr. Deng Xiaoping delivered a total of five speeches from October 1978 to July 1979 urging the development of China’s tourism. Mr. Deng pointed out positive functions of tourism to China’s politics, economy and reform, which set up the keynote and gave a direction for China to develop its tourism in 20 years time frame. In the period from 1981 to 1985, the Chinese government underlined the principals of making full use of efforts from central government, local government, organizations, collectivities and individuals to build up China’s tourism infrastructure and facilities with self- independence and foreign investment. It was in the period from 1986 to 1990 that the government defined the industrial position of tourism for the first time, and the management system in tourism industry was shaped. China’s international tourism hit a boom period since 1990, as the central government further pointed out that tourism was a new focal point of China’s national economic growth and set tourism as a pillar industry for economic development at national as well as local levels. The second force pushed the development of China’s Tourism industry originated from the contribution of the policy reform and openness. The reform and opening door policy set the milestone to China’s economic growth as well as to the tourism development. In the past 20 years, China’s tourism industry took a dramatic turn in the pace of its development as China’s trade relationship with other countries became more liberal. New trade policies in business 6 development encouraged all industries to be more opened and to be more market orientated approaching the international level. This newly developed international relationship between China and other countries directly and indirectly promoted the International Tourism activities in all regions in China, which led the China’s Tourism industry to a new era based on the market mechanism. In accordance with China’s national situation and social character, China’s central government gradually strengthened the building of trade civilization while developing tourism and kept the correct development orientation of three markets by determining the policy of ‘actively develop inbound tourism, positively develop domestic tourism business, and properly develop outbound tourism business’.